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Will getting a car loan affect my chances to get a mortgage?
I'm in the middle of house shopping and car shopping, but I'm not sure which to do first. If I get a car loan first, will it affect my chances to get a mortgage?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
If you decide to get a
car loan
first, it will impact your credit score negatively, but not necessarily enough to disqualify you from a mortgage.When you get a car loan, your score will drop for three reasons:
- Hard inquiry on your credit report
- Reduced average age of your credit as a whole
- Increase in your credit utilization ratio
If you add these up, you’re probably looking at a 20 to 30 point drop in your credit score. However, this isn’t a deal-breaker for getting a mortgage, unless you’re planning to do them in quick succession.
Since the initial hit to your credit score is only temporary, all you need to do is make your loan payments on time and build back your credit to qualify for a good mortgage.
If you’re wanting to buy a house right now and you’re not just browsing, you may want to buy the home first. Again, a 30-point hit to your credit score from taking out a car loan may impact your chances of getting a mortgage, depending on your other financial qualifications.
If you decide to purchase the car first, make sure to budget and shop for the right
car insurance
. Use the Jerry
app to compare dozens of competitive quotes and get the best value for your money.View full answer
- Gregory R.
WHY YOU CAN TRUST JERRY
Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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